LQB Busniess plan

Booz & Company

This document is confidential and is intended solely for

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Launching the world-class Libyan Qatari Bank Fifth Steering Committee

Tripoli, July 31, 2010

Prepared for Libyan Qatari Bank Booz & Company

31 July 2010 1

Approval of minutes from last Steering Committee

GM report on progress

Review of project status

Review of issues and risks

Approval for new premises

Approval for appointment of key positions

Approval of advertising agency

Any other business

Appendices

Agenda


31 July 2010 2








Any other business

Appendices

Agenda


31 July 2010 3

In the last meeting the critical path was shifted by three weeks as a result of delays in premises and the hiring of key staff

1) Delay as outlined in Steering Committee 4 due to lack of appoint key staff members (e.g., Head of HR) and delay in securing premises

Note: Interim milestone dates have been updated based on further detail provided by Temenos and the IT infrastructure vendor

Source: Booz & Company analysis

All manuals completed

and translated

Project Milestones

All staff training

completed

All marketing

material ready

Soft Launch

• Select IT system

• Identify head office

• Detail

regulatory

requirements

• Detail product

features

• Develop op.

model

• Complete &

review IT

requirement

s

• IT system

implementati

on

• Business and

technical

training

• User

acceptance

testing

Jul 11 Sep 28 Oct 13 Nov 14 Feb 20 Mar 30

(TBC)

Launch

D

E

L

A

Y

3

W

E

E

K

S(

1

)

High-Level Critical Path

Temporary HO

selected

Key staff (e.g.,

Head of HR)

hired

Appoint

branding

agency

IT vendor

selected

Jun 20

Temporary HO and

branch ready for

data center

Chart of

Accounts

ready

IT business

requirements

gathering completed

Year 1 budget &

funding plan

completed

Staff required at

launch hired and IT

training initiated

Key Policies &

Procedures

completed

Third party

agreements signed

IT infrastructure ready

for integration testing

Wave I & II

of recruiting

completed

Product forms and

contracts developed

Forms and

contracts printed


31 July 2010 4

The appointment of key staff and the securing of premises remains outstanding, so impacting the project timelines

Source: Booz & Company analysis

All manuals completed

and translated

Project Milestones

All staff training

completed

All marketing

material ready

Soft Launch

• Select IT

system

• Identify HO

• Detail

regulatory

requirements

• Detail product

features

• Develop op.

model

• Complete &

review IT

requirement

s

• IT system

implementati

on

• Business and

technical

training

• User

acceptance

testing

Jul 11 Mar 13 Apr 24

(TBC)

Launch

D

E

L

A

Y

3

W

E

E

K

S

Temporary HO

selected

Appoint

branding

agency

IT vendor

selected

Jun 20 Jul 31

D

E

L

A

Y

3

W

E

E

K

S

Sep 28 Oct 13 Nov 14

Key staff (e.g.,

Head of HR)

hired

High-Level Critical Path

Chart of

Accounts

ready

IT business

requirements

gathering completed

Staff required at

launch hired and IT

training initiated

Key Policies &

Procedures

completed

Third party

agreements signed

IT infrastructure ready

for integration testing

Wave I & II

of recruiting

completed

Forms and

contracts printed

Temporary HO and

branch ready for

data center

Year 1 budget &

funding plan

completed

Product forms and

contracts developed


31 July 2010 5 5

The premises and corporate identity workstreams have ‘issues’, while HR workstream remains ‘off track’

Highlights

Head of Risk & Credit on board - other Level

1 resources not yet joined due to protracted

negotiations and delays in approvals

Temporary Head Office agreement is in the

process of being finalized by the GM

Temenos implementation has been kicked

off, however, the IT department has yet to be

recruited

IT infrastructure contract has been signed

Remaining process workstreams have been

kicked off and are underway

Branding agreement is in the process of

being finalized by the GM and vendor

Status Update

= Completed = On Track = Issues = Off Track

5

Risk Credit Internal Audit &

Compliance

Third Party

Agreements

Corporate

Identity &

Marketing

Products &

Channels

HR & Recruitment

IT Systems

Finance &

Accounting

Five-Year

Strategy

Premises &

Infrastructure

Treasury Operations

Organization

Design

One Year

Business Plan

Overall Status Issues


31 July 2010 6

IT Update: Significant progress has been made for the key systems in the IT workstream with several major milestones being passed

The IT workstream has gained further momentum since the last Steering Committee meeting:

Temenos:

– A contract was signed with Temenos on 20th July 2010

– The project was kicked off in Dubai on 26th July 2010

IT Infrastructure:

– Commercial negotiations concluded with Agathon

– A deal was finalized for LYD 5.2m that included a 10% discount and free IT Security and Policies &

Procedures manuals

– A legal review of the contract is under way, however a purchase order for critical data center

equipment has been issued to ensure a Temenos deadline of 12th October 2010 is met

ATM Machines and Card Management:

– Evaluations of ATM machine vendor proposals are currently underway

– Additional information has been requested from card management services and ATM network

switch vendors / outsourcing companies

IT Workstream Update

6 Booz & Company

22 May 2010


31 July 2010 7

Position PCTotal

Points Size ImpactContrib

u-tionPoints

Commu

nicationFrame Points

Innovati

on

Comple

xityPoints

Know-

ledge Teams Breadth Points

Chief Executive Officer 66 678 6 5 3 265 5 4 115 4 4 80 7 3 1 218

Innovation KnowledgeImpact Communication

Compensation Recap: Mercer sized each job at LQB based on four factors: impact, communication, innovation and knowledge

Measures the contribution of a job in

achieving business results

Includes size of a company, taking into

account the number of employees and the

total revenues/assets

Measures the level of influence in relation

to the job

Measures both the complexity

of the framework in which a

position is performing and the

freedom to act

Measures the expertise required to cover a

position and the number of resources

assigned to the role

Impact Innovation

Knowledge

Communication

1

2

3

4

General Manager

Position Class indicates

size of job


31 July 2010 8

Each job was placed into a particular grade reflecting its size and importance to the organization

Job Grading - Illustrative Output

Note: PC = Position Class, an indication of the size of the job based on Mercer’s Position Evaluation factor weighting

Reporting

Line Grade PC Reporting to LQB Position

0 11 66 General Manager

1 10 63 GM Head of Retail Banking

1 10 63 GM Head of Wholesale Banking

1 10 62 GM Head of Insurance, Brokerage & Asset Management

1 10 62 GM Chief Operations Officer

1 10 62 GM Head of SME Banking

1 10 61 GM Head of Finance

1 10 61 GM Head of Risk Management

1 10 61 GM Head of Human Resources

1 9 60 GM Head of Credit

1 9 59 GM Head of Office of the GM

1 8 57 BoD Head of Shari'ah

1 8 57 BoD Head of Internal Audit

Position Class indicates

size of job

BoD


31 July 2010 9

Of the key leadership roles at the bank, there are eight grade tens, and one grade nine and eight

Insurance,

Brokerage & Asset Mgmt

Office of the GM

Risk Mgmt & Credit Finance Wholesale

Banking

SME

Banking Human Resources

Retail

Banking COO

Treasury

GM

10 10 10 10

9

10 10 10

8

10

11

x = Grade

63 62 61 62

59

62 61 61

57

63

66

x = Position Class

Note: The Risk and Credit positions have been combined in the start up phase

The Chief Business Officer role is dependent on recruitment of an appropriately qualified candidate. If recruited, will operate as the Deputy General Manager

Organization Structure & Grading

Chief Business Officer

10 65


31 July 2010 10

Base salary bands were set according to each job’s grade

LQB Base Salary Bands - Recommended by Mercer

Grade Grade Titles

Minimum Midpoint Maximum Range Spread

Range

Progression

11 General Manager 226,300 339,500 452,600 100% 60%

10 Assistant General Manager(1) 141,500 212,200 283,000 100% 60%

9 Assistant General Manager 96,400 132,600 168,700 75% 60%

8 Manager 60,300 82,900 105,500 75% 40%

7 Deputy Manager 47,400 59,200 71,100 50% 40%

6 Assistant Manager 33,800 42,300 50,700 50% 40%

5 Senior Professional 24,200 30,200 36,300 50% 40%

4 Professional 17,300 21,600 26,000 50% 40%

3 Administrator 12,300 15,400 18,500 50% 40%

2 Junior Administrator 8,800 11,000 13,200 50% 10%

1 Support Services 8,000 10,000 12,000 50% --

1) Note the title Deputy General Manager has been replaced with the title Assistant General Manager for clarity = Recommended by Mercer


31 July 2010 11

Mercer recommended the mid-point as the most appropriate salary reference point

The lowest rate paid;

typically for new hires

without experience in

the job

Minimum

Midpoint

(Reference Rate)

Maximum

Range Spread

Minimum

Midpoint

(Reference Rate)

Maximum

Range Spread

=

The highest rate paid;

serves to control

compensation levels

The organization’s market target for

all jobs within the grade

Mercer’s recommended reference

point for salaries

Guide to Ranges & Reference Points

Recommended by Mercer


31 July 2010 12

For recruits currently paid less than the recommended compensation, LQB should increase their pay gradually over time

Joining Year 1 Year 2

LQB

Recommended

Compensation

Level

Co

mp

en

sa

tio

n

Comments

Where candidates are currently paid

significantly less than the

recommended salary, LQB should

phase salary increases

On joining candidates should be

granted no more than their current

salary, plus one third of the difference

between this salary and Mercer’s

recommended salary

At the end of Year 1, candidates

should be granted the second third of

the difference

Only at the end of Year 2 candidates

pay should be increased to reach

parity with the Mercer

recommendations

Candidate’s

Salary at

Existing

Employer

Joining

Salary

Year 1

Salary

The Year 2 increase

represents a further one third

of the salary differential

Total salary differential between

candidate’s current salary and

Mercer’s recommended salary

The Year 1 increase represents

one third of the salary differential

Implementation for Payment Structure


31 July 2010 13








Any other business

Appendices

Agenda


31 July 2010 14

Project Issues

Module Issues Impact Action Required Responsibility Target Res.

Date

PMO Lebanese resources

have not been able to

secure entry visas

Delay in the opening dates

for the bank

Follow up on second letter to

Office of the Prime Minister.

Resources are:

- Fadi Najjar

- Maha Raad

- George Haimari

Board

members

July 11

PMO Implementation of

approvals is taking longer

than desired

Delay in progress of key

workstreams (e.g., premises,

hiring)

Steering Committee to

delegate increased decision

making capacity to the GM,

where feasible

Steering

Committee

July 11

HR Critical lack of IT and

business resources on

board to work with

Temenos and other IT

vendors

Delay in IT implementation

due to LQB’s lack of ability to

‘keep up’ with IT vendors

Engage temporary local IT

contractors

Secure immediate

appointment for outstanding

resources

Steering

Committee

July 11

Key Project Issues Overview Date 31 July 2010


31 July 2010 15

Project risks

Module Risk Mitigating Action Responsibility

HR

Risk of potentially not meeting hiring

targets

Recruit business heads as a priority

Increase speed of recruiting decision making

Increase pressure on recruiting partner

Booz & Company

LQB Management

Board

IT

Risk of delays in Temenos

implementation due to lack of LQB IT

and business resources

Prioritize rapid recruitment of IT project

managers and business heads to work with

Temenos on implementation

Booz & Company

Recruitment Vendor

IT

Risk of delay in launch due to

compressed IT timelines with limited

margin for error

Regular and detailed communication to ensure

continued awareness of key dependencies,

risks and issues

Booz & Company

IT Vendors

Premise

Risk of delay in recruitment due to lack of

space resulting from slow move to new

premises - office capacity reached by

August 1

Accelerate move to temporary offices

Plan office move on phased basis (e.g.,

prepare initial section of offices ASAP)

LQB Management

Premises workstream

Key Risks Overview Date 31 July 2010


31 July 2010 16








Any other business

Appendices

Agenda


31 July 2010 17

Al Hadba offers superior access and layout and requires minimal interior improvements

Dhara Building Al Hadba

Accessibility Good: Accessible by major thoroughfare, university

parking facilities can be used by the bank

Excellent: Accessible by major thoroughfares,

availability of parking within the property. Additional

parking space can be constructed if required

Layout Good: Designed for a bank, vaults already in

premises, customizable space. Excellent: Open floor plan, customizable to bank needs

Feasibility of

Branch Good: Large banking floor available for usage Excellent: Availability of multiple banking floors

Size 2,425 sqm 2,550 sqm .

Price

LYD 3.9m (Total cost of proposed lease based on

currently negotiated contract of 5 years)

LYD 65K per month lease

LYD 11m (Total cost of purchase)

Readiness

to Move In Immediately, some interior work required Immediately - minimal interior work required

Recommendation Do Not Progress Progress

Temporary Head Office Evaluation

Note: The Dhara building was originally intended to be held for two years until a permanent Head Office was built

= Recommended


31 July 2010 18








Any other business

Appendices

Agenda


31 July 2010 19

Six key positions need to be approved today

Insurance,

Brokerage & Asset Mgmt

Office of the GM

Risk Mgmt & Credit Finance Wholesale

Banking

SME

Banking Human Resources

Retail

Banking COO

Treasury

Note: The Risk and Credit positions have been combined in the start up phase

The Chief Business Officer role is dependent on recruitment of an appropriately qualified candidate. If recruited, will operate as the Deputy General Manager

Chief Business Officer

= Hired

= Identified SC approval required

= Not identified

= Priority Positions

Internal Audit

Overview of Key Positions Recruitment Status - Approvals Required

GM


31 July 2010 20

Six key positions need to be approved today (cont’d)

Position Recommended

Candidate Previous Employers Experience Nationality Status

Head of Retail

Banking

Alexandre

Tabbah

Al-Ahli Bank of Kuwait, Head of Retail, Kuwait

(2 years)

NBK, Head of Retail, Kuwait (10 years)

+ 25 Years Egyptian

Offer to be issued pending

interview with LQB GM

and SC approval

Head of SME

Banking Mohamed Basher

NEDB, Head of Business Support (2 years)

North Africa Bank, Director of Branches (9

years)

+ 20 Years Libyan Offer verbally agreed

pending SC approval

Head of

Wholesale

Banking

Natheir Nasrawin

Standard Chartered, Wholesale Bank Country

Head (4 years)

Arab Bank, Head of CR (5 years)

+ 15 Years Jordanian Offer verbally agreed

pending SC approval

Chief

Operating

Officer

Sadok Attia

Noor Islamic Bank, Country General

Manager, UAE (2 years)

Citibank, various roles (+20 years)

+ 30 Years Tunisian Offer verbally agreed

pending SC approval

Head of HR Senussi Senussi OPEC Head of HR & Admin (5 years)

Sirte Oil Company, Libya (+20 years) + 30 Years Libyan

Offer verbally agreed

pending SC approval

Head of

Internal Audit Ali Milad Zaidi Gumhouria Bank, Head of Internal Audit + 25 Years Libyan

Offer verbally agreed

pending SC approval

Overview of Key Positions Recruitment Status - Approvals Required


31 July 2010 21








Any other business

Appendices

Agenda


31 July 2010 22

The advertising agency will play an essential role in the launch success of the bank

Role of Advertising Agency

The primary role of an advertising agency is

to effectively communicate with the bank’s

target audience using a range of medium

(e.g., newspapers, billboards, television,

events)

The advertising agency will play an

essential ongoing role in generating

awareness and acquiring customers for the

bank, particularly amongst the mass market

retail customers

Note: Branding agencies are responsible

for developing the corporate identity of an

organization through logos, and design of

retail environments

Contents of Advertising Agency RFP

The RFP required the advertising agency to

submit a proposal for the following

activities:

– Developing first year marketing plan

– Creating material and content required to execute market plan

– Negotiating and procuring media channels as per bank marketing plan

– Managing end-to-end delivery of the campaigns

– Providing ongoing performance evaluation of campaigns

Note: The RFP does not include the

purchasing of media (e.g., television

airtime) for the advertising campaign

Role of Advertising Agency & Contents of RFP


31 July 2010 23

ZHL-JWT Arabicomm MENACOM Mindshare Remas Sadeem

Previous FS

Experience

Very Strong: Bank

launch in Tunisia &

Dubai; HSBC

Amanah Middle

East campaign

Moderate: HSBC

campaigns in

Malta. Minor work

for NCB in Libya

Strong: Led the

Mashreq UAE

repositioning; launch

campaigns for Citi

and Bank of Muscat

Strong: Many ME

banking clients,

including Arab

Bank, HSBC and

Attijari (Tunisia)

Weak: No bank

engagements, no

demonstrated

international

experience

Weak: No

experience with

banks

Relevant Libyan

Experience

Very Strong:

Completed projects

in Libya with local

team of 15 staff

Strong: Have done

some work in Libya

in conjunction with

a local partner

Moderate: Media

relations and

communications for

Libya Energy City

Weak: No local

presence in Libya,

but would operate

through ZHL-JWT

Moderate: Libyan

based with

experience in

media buying

Moderate: Libyan

based; clients

include Samsung,

Sony & Bel

Initial Creative

Concepts

Very Strong:

Aligned with LQB

values, engaging

for customers

Strong: Captures

Libyan values with

classic visuals

Moderate: Clever

use of visuals,

“making banking

easier”

Weak: Generic

visuals and

messaging

Moderate: Classic

Libyan visuals, but

not aligned with

LQB values

None provided

Pricing 12% of total

marketing budget

Total: $204k(1)

$90,000 retainer

per year +12.5% of

net costs +1% tax

Total: $320k(1)

ATL agency: $480k

Media agency: $30k

BTL agency: $230k

PR: $145k

Total: $885k

Management &

Creative: $336k

PR: $48k

Media: $70k

Production: $45k

Total: $500k(1)

15% of net costs

Total: $255k(1)

10% of net costs

Total: $170k(1)

Evaluation

Overview

Strong local

presence backed

by international

expertise

Competitive price

Local and regional

experience, but

may be undersized

for the task at hand

Insufficient presence

and knowledge in

the Libyan market;

expensive pricing

Weak local

presence and

expensive price

for overseas

support

Good local

presence, but

unproven ability to

lead a bank launch

campaign

Weak planning &

creative ability;

Expertise mainly in

media buying &

production

Recommendation Progress Do not progress Do not progress Do not progress Do not progress Do not progress

ZHL-JWT is by far the most attractive advertising agency in Libya

Advertising Agencies Evaluation = Recommended

1) Total pricing is estimated on the assumption of a $1.7mn first year marketing budget ($1.4mn for media/events and $0.3mn for production)


31 July 2010 24








Any other business

Appendices

Agenda


31 July 2010 25

Any other business

Approval of Booz & Company August Invoice - B3149200010001 Inv 8 - USD 600k

Next Steering Committee Sunday 19th September 2010


31 July 2010 26

Minutes from Fourth Steering Committee

New Premises

- GM Memo on New Premises

- Evaluation of New Premises

Appendices: List of Supporting Documentation (1/3)


31 July 2010 27

Appointment of Key Positions

- Head of Retail Banking

- Head of SME Banking

- Head of Wholesale Banking

- Chief Operating Officer

- Head of Human Resources

- Head of Audit



31 July 2010 28


- GM memo

- RFP on advertising agency

- Evaluation of advertising proposals

- Advertising agency proposals (see electronic file of appendices)


LQB Busniess plan

Business

Transcript of LQB Busniess plan